AmortMapWhat a given loan amount actually costs per month, and over its life.

How to pay off $16,000 in credit card debt at 21% APR

$16,000 at 21% APR
$603a month clears it in three years
paying the $440 minimum instead takes 28.7 years and $26,958 in interest
Years to clear the balance28.7 yrminimum only$440/mo at first3 yr$603/mo fixedsame card, same rate2 yr$822/mo fixed1 yr$1,490/mo fixedThe minimum shrinks as the balance does — that is why it takes 28.7 years
Minimum payment, first month1% of the balance plus that month's interest, floored at $25$440
Years on minimums only$26,958 of interest — 168% of what was borrowed28.7 years
Clear in 12 months$1,878 interest$1,490/mo
Clear in 24 months$3,732 interest$822/mo
Clear in 36 months$5,701 interest$603/mo
Clear in 60 months$9,971 interest$433/mo
Interest accruing right now$3,360 a year if the balance never moves$280 a month

Notes

  • The minimum payment is designed to last. At $440 it clears this balance in 28.7 years and costs $26,958 in interest — 168% of the amount borrowed. The reason is that the minimum falls as the balance falls, so the payment shrinks just as fast as the debt does.
  • A fixed payment is the whole fix. Paying $603 every month regardless of what the statement asks clears it in three years for $5,701. Nothing else about the account has to change.
  • A 0% balance transfer is worth about $3,732 here, less the transfer fee of 3–5% ($480–$800). It only helps if the balance is actually cleared inside the promotional window; the rate afterwards is usually higher than the one you left.
  • Interest is charged daily on the average balance, not once at month end. Paying mid-cycle reduces that average and therefore the charge, which is why two people paying the same total in the same month can be charged different amounts.

The short answer

$16,000 at 21% APR takes 28.7 years to clear on minimum payments, and costs $26,958 in interest on the way.

Paying a fixed $603 a month instead clears it in three years for $5,701.

Fixed payments, every option

Cleared in Payment Interest
12 months $1,490 —
24 months $822 —
36 months $603 $5,701
60 months $433 —
minimums only $440 at first $26,958

Why the minimum takes 28.7 years

The usual minimum is 1% of the balance plus that month's interest, floored at $25. Because it is a percentage of the balance, it falls as fast as the debt does.

Every payment shrinks the next payment. The schedule flattens out and stays flat. That is not a side effect — a balance that clears quickly earns nothing.

The fix is not a bigger payment forever. It is a fixed payment: pay $603 every month regardless of what the statement asks, and nothing else about the account has to change.

Interest accrues daily, not monthly

At 21% this balance is accruing about $280 a month, and it is calculated on the average daily balance.

Two consequences most statements do not spell out. Paying mid-cycle rather than on the due date lowers that average and therefore the charge. And a balance carried even once usually loses the grace period, so new purchases start accruing immediately rather than at the end of the next cycle.

Balance transfers are worth about $5,701 here

A 0% promotional transfer saves the interest for the length of the promotion, minus a transfer fee of 3–5% — $480–$800 on this balance.

It only helps if the balance is actually cleared inside the window. The go-to rate afterwards is usually higher than the one being left, and the promotion does not restart.

Order of attack when there are several cards

Highest rate first costs the least in total. Smallest balance first clears accounts soonest and is easier to keep going.

The gap between the two is usually small in dollars and large in whether the plan survives to month twelve. Pick the one you will still be doing next year.

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